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HMRC internal manual

Senior Accounting Officer Guidance

What is a qualifying company: conditions for a qualifying company: aggregation of balance sheet totals

Where a UK incorporated company is a member of a group but on its own does not meet either of the financial conditions in SAOG11210, the responsible officers must look beyond the company’s own preceding year turnover and balance sheet total to check whether it is a qualifying company. They must check whether by aggregating the company’s turnover or balance sheet assets with those of group companies the turnover and/or balance sheet conditions are met.

If the company was a member of a group at the end of the preceding year, they must look at the aggregated balance sheet total of all the companies falling within the definition at SAOG11220 within the same group, including that of the company itself, for the preceding financial year.

For the purposes of the grouping test the company is treated as and grouped with other relevant bodies.

  • A relevant body is a member of a group where

    • it is a 51% subsidiary of another relevant body or
    • it has a 51% subsidiary which is a relevant body.
  • Two or more relevant bodies are members of a group where

    • one is the 51% subsidiary of the other or
    • both are 51% subsidiaries of a third relevant body.

The definition of a 51% subsidiary is in accordance with S1154 Corporation Tax Act 2010.

A relevant body is a company or other body corporate but does not include a limited liability partnership. Any relevant body’s balance sheet total is only aggregated if it is a company as defined in SAOG11220. For examples of which group companies to aggregate, see SAOG11280.

In aggregating group balance sheet totals the responsible officers must exclude the value of investment in any other UK incorporated company in the group.

Aggregating balance sheet total figures will usually be straightforward where all group companies have financial years that end on the same date. Where they do not, see SAOG11290.

FA09/SCH46/PARA15 (4) & (5)

FA09/SCH46/PARA18 (2)